| Advances in encryption and computer networks have paved the way for a purely electronic-based currency substitute: digital money. It excels known payment systems in many respects and fits the requirements of Internet commerce uniquely. Many private companies currently try to gain a share of this growing market, allured last not least by the freedom of lacking regulation. The economic behavior of network money differs considerably from paper currency: holdings of digital money will be small. Its introduction comes together with mass speculation and transnationality. Additional systemic risks increase the instability of our payment systems. Technically, also privately supplied money becomes feasible. This amplifies confidence issues and diminishes the central banks' control over the money supply further. A responsible policy has to recognize the importance of digital money for economic stability and, hence, regulate its issuers. |